A few concerns raised that valuations of unlisted investments may not be accurate, here are a couple of my thoughts:

At a ~35 discount you are being given a huge margin of safety even if valuations were off the mark. However I actually think you can assume the valuations done by the manager/board are fairly reliable.

First off cash is cash. Straight away that accounts for 25% of the NTA being accurate.

Secondly if you are a new manager coming in, your chance to get all the skeletons out of the closet is now. You would pressure the board downgrade the valuations to a more appropriate price and the blame the even bigger resulting discount on Bluesky. Setting yourself up to be the heroic saviour.

There is nothing to gain for the board or incoming manager to hold up valuations that were inflated, which is why I think it is a high probability that valuations are not too far off the mark.

BAF is a LIC fund of predominately unlisted investments which was once managed by Bluesky who crashed and burned in spectacular fashion a couple of years back. There is nothing wrong with the BAF portfolio, however it still suffers from the stigma of sharing the Bluesky name.

Wilson Asset has just signed on to take over the fund (approval pending.) WAM funds are the polar opposite carry a huge premium for no real reason other than Geoff Wilson has an army of long time loyal shareholders who have over the years bid his LIC’s up often to crazy premiums.

I know what you are thinking.. sounds like a boring investment. But ask yourself what is going to happen when Geoff gets a hold of this thing and changes the name to Wilson? It currently trading at a massive 35% discount to NTA.

The the fund currently has ~25% in cash and over 25% in a water asset uncorrelated to equities. 

In other words it is extremely low risk. When WAM get a hold of it I can see that discount moving from 35% to say 20% quick smart. A reasonable timeline for this may even be 4 months. So not accounting for any rise in the portfolio itself you could potentially make 15% in 4 moths, while taking very little risk. 

A low risk annualised return of 45% doesn’t sound so boring after all and this name is worthy of a large position in the portfolio.